Go home Jamie!

Since I wrote about this issue here last week, a great deal of support has been expressed for the recommendation that Jamie Dimon should step down from the board of the New York Fed — including by over 32,000 people who signed the petition I drafted. (The petition is addressed to the Board of Governors of the Federal Reserve, as only it has the power to remove a director of a Federal Reserve Bank. I have requested an appointment with a governor on Monday, in order to deliver this petition and discuss the substantive issues; a relevant Fed staff member is currently checking availability. I hope to write about that meeting here next week.)

The pressure on Mr. Dimon is increasing with a steady flow of news articles concerning the care with which risk has been managed at his bank — including the suggestion that the risk committee of the JPMorgan Chase board lacks sufficient experience to understand or monitor the complexity of the bank’s operations. (See also the coverage from Forbes and CBS MoneyWatch.)

We need an independent inquiry into exactly how JPMorgan lost so much money so quickly on its London trading operations — which supposedly were just “hedging.” It would also be helpful to know how Jamie Dimon, widely regarded as a good risk manager, did not know what was happening in London until Bloomberg News brought it to his attention — and why even then he denied there was a serious issue. Is this a systematic breakdown in management and risk control systems? What exactly went wrong with the relevant models? What can we learn that would help improve the safety of the financial system? Have the largest banks grown too big and too complex to be managed safely?